A Case on Zanith
Zanith is one of the world’s leading consumer goods providers in Europe, US, and South East Asia. The group
has interests in grocery, food items, financial services, and telecommunications. It is committed to reducing
prices for customers and offering the best value. It seeks to help customers spend less. For 2007, sales were
$42,633.4 (mill) which was 38% of total market sales where their close competitor Wal Mart had only 29% of
the total market sales. Zanith experienced sales growth of 21.9% in 2007. Zinath has over 400,000 employees.
Intense competitive rivalry within the UK retail market is forcing retailers to look at cost savings and ways that
they can differentiate from competitors. The retail market is mature and oligopolistic in its nature, with a few
major multiple retailers dominating the market. Intense competition between the large retailers has to price
wars with Asda and Zanith and low price competitors - Netto and Lidl are reducing margins for the industry as a
whole.
Moreover, Zanith has a problem with their suppliers. Though they outsourcing all of their inputs from different
countries whole over the world, but rising raw material costs from both food and non food will impact profit
margins overall. So Zinath are facing a tough situation to maintain their organization as cost leader in the
market.
As it a perfect competition market, all the information about the quality and price of the product is known to the
consumer and consumers are readily switched over product and services of other competitors.
As Zanith is a consumer goods and services provider, there are lots of substitutes are available in to the markets
of their products and services that why Zanith always have give concentration on the changes in the prices and
product attributes of the substitute goods and services.
The government has also been active in planning restrictions for new store openings. The new organizations are
taking the advantages of the restrictions and easily got chances to enter in the market. There is also a threat of
takeover for Zanith from the market leader Wal Mart who has both means and motive to pursue such action.
Some of the key reasons for Success and Challenges for the Zanith include:
ZANITH have secured commercial standing within the global market place winning Retailer of the Year 2008
at the “World Retail Awards”. This can be used for marketing campaigns to drive advantage towards the
demographic base for future growth and sustainability. In an environment where global retail sales are showing
decline or level performance on a like for like basis ZANITH Group have published sales gain of 13% for UK
markets and 26% growth in international markets. As a business looking for continued expansion ZANITH
have reserve funds of credit coupled with income derived from property portfolio development funds.
ZANITH Finance profit levels were impacted through bad debt, credit card arrears and household insurance
claims. ZANITHs position as a price leader in UK markets can lead to reduced profit margins in order to retain
the key price points on must have commercial items. Grocer outlets are not set up to operate as specialist
retailers in specific areas of product which can be capitalized on by other smaller bespoke retailers. Whilst
current economic conditions suggest ZANITHs key value message will succeed there is a weakness in nonessential, mid to high ticket price items which will suffer from the rising cost of living and lower disposable
incomes.
Statistics suggest ZANITH is the third largest global grocer which indicates a level of buying power to ensure
mainstream economies of scale. The acquisition of Homever provides the opportunity to develop the brand
through Asia, specifically South Korea and further grow International markets for the group. The development
of Zanith Direct through online and catalogue shopping will grow the use of technology, providing the launch
pad for larger non food based products with moderate to high margin returns and less focus on sales and margin
per foot return to space. ZANITH mobile have grown ¼ million customers in 2008 and moved into profitable
status suggesting further growth and development within this technological area can be developed.
UK and American markets have been affected by economic concerns through the “credit crunch”. Lower
available income will impact and strategic focus may need to change to lower priced basic products with less
focus on higher priced brands suggesting a switch in price architecture. Rising raw material costs from both
food and non food will impact profit margins overall. Sourcing changes to Far East locations with regards
exporting restrictions on some non food product areas will reduce margin rates on products with already low
margins. Changes to consumer buying behaviors require further analysis - as technology develops consumer
buying patterns change which will result in product areas requiring evaluation. For Zanith there is a persistent
threat of takeover from the market leader Wal-Mart who has both means and motive to pursue such action.
Sales and Market Related Information:
The industry where Zanith are operating there business is a matured industry. Intensive price competition will
lead the Zanith as the second highest competitor in the market. For 2007, sales were $42,633.4 (mill) which was
38% of total market sales where their close competitor Wal Mart had only 29% of the total market sales. Zanith
experienced sales growth of 21.9% in 2007. Market leader is Wal Mart but in the year of 2007 Zanith sales
revenue was 9% higher than the market leader.
The top management will know that the growth in the sales of 2007 is not the indication of market leader. They
are now thinking to sustain in that level by opening more outlets in the different countries. Basically their target
is in the Asian countries.
They are also planning to establish their won Brand though they have lots of product in their product line with
their own brand. They also decide to introduce new products and services in their consumer product line. But
the main problem is that they have no separate Research & Development team.
N.B.: This case only for using study purpose.
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A Case Study Zanith Group: Sustain in the market place with vulnerable environment
Introduction:
Zanith is one of the world’s leading consumer goods providers in Europe, US, and South East Asia. The group
has interests in grocery, food items, financial services, and telecommunications. It is committed to reducing
prices for customers and offering the best value. It seeks to help customers spend less. For 2007, sales were
$42,633.4 (mill) which was 38% of total market sales where their close competitor Wal Mart had only 29% of
the total market sales. Zanith experienced sales growth of 21.9% in 2007. Zinath has over 400,000 employees.
Problem Statement:
Sustain in the marketplace with intense price competition.
Analysis of the Business Environment of Zanith with Michel Porters Five Forces Model:
Threats of New Entrance
The government has also been active in
planning restrictions for new store openings.
The new organizations are taking the
advantages of the restrictions and easily got
chances to enter in the market. There is also a
threat of takeover for Zanith from the market
leader Wal Mart who has both means and
motive to pursue such action.
Threats from Supplier
Moreover, Zanith has a problem
with their suppliers. Though they
outsourcing all of their inputs from
different countries whole over the
world, but rising raw material costs
from both food and non food will
impact profit margins overall. So
Zinath are facing a tough situation
to maintain their organization as
cost leader in the market.
Rivalry among Competitors
Intense competitive rivalry within
the UK retail market is forcing
retailers to look at cost savings
and ways that they can
differentiate from competitors.
The retail market is mature and
oligopolistic in its nature, with a
few major multiple retailers
dominating the market. Intense
competition between the large
retailers has to price wars with
Asda and Zanith and low price
competitors - Netto and Lidl are
reducing margins for the industry
as a whole.
Buyer Bargaining Power
As it a perfect competition market, all
the information about the quality and
price of the product is known to the
consumer and consumers are readily
switched over product and services of
other competitors.
Threats of Substitute Product
As Zanith is a consumer goods
and services provider, there are
lots of substitutes are available in
to the markets of their products
and services that why Zanith
always have give concentration
on the changes in the prices and
product attributes of the substitute
goods and services.
SWOT Analysis of Zanith:
Strengths



ZANITH have secured commercial standing within the global market place winning Retailer of the Year
2008 at the “World Retail Awards”. This can be used for marketing campaigns to drive advantage
towards the demographic base for future growth and sustainability.
In an environment where global retail sales are showing decline or level performance on a like for like
basis ZANITH Group have published sales gain of 13% for UK markets and 26% growth in
international markets.
As a business looking for continued expansion ZANITH have reserve funds of credit coupled with
income derived from property portfolio development funds.
Weaknesses




ZANITH Finance profit levels were impacted through bad debt, credit card arrears and household
insurance claims.
ZANITHs position as a price leader in UK markets can lead to reduced profit margins in order to retain
the key price points on must have commercial items.
Grocer outlets are not set up to operate as specialist retailers in specific areas of product which can be
capitalised on by other smaller bespoke retailers.
Whilst current economic conditions suggest ZANITHs key value message will succeed there is a
weakness in non-essential, mid to high ticket price items which will suffer from the rising cost of living
and lower disposable incomes.
Opportunities




Statistics suggest ZANITH is the third largest global grocer which indicates a level of buying power to
ensure mainstream economies of scale.
The acquisition of Homever provides the opportunity to develop the brand through Asia, specifically
South Korea and further grow International markets for the group.
The development of Zanith Direct through online and catalogue shopping will grow the use of
technology, providing the launch pad for larger non food based products with moderate to high margin
returns and less focus on sales and margin per foot return to space.
ZANITH mobile have grown ¼ million customers in 2008 and moved into profitable status suggesting
further growth and development within this technological area can be developed.
Threats





UK and American markets have been affected by economic concerns through the “credit crunch”.
Lower available income will impact and strategic focus may need to change to lower priced basic
products with less focus on higher priced brands suggesting a switch in price architecture.
Rising raw material costs from both food and non food will impact profit margins overall.
Sourcing changes to Far East locations with regards exporting restrictions on some non food product
areas will reduce margin rates on products with already low margins.
Changes to consumer buying behaviors require further analysis - as technology develops consumer
buying patterns change which will result in product areas requiring evaluation.
For ZANITH there is a persistent threat of takeover from the market leader Wal-Mart who has both
means and motive to pursue such action.
Strategies Zanith are following:
Cost leadership strategies with few differentiations.
Ansoff Matrix Analysis of Zanith:
The top management will know that the growth in the sales of
2007 is not the indication of market leader. They are now
thinking to sustain in that level by opening more outlets in the
different countries. Basically their target is in the Asian
countries. They are also planning to establish their won Existing
Brand though they have lots of product in their product line Markets
with their own brand. They also decide to introduce new
products and services in their consumer product line.
So, Zanith are actually trying to adopt a diversification
strategy with new product and new markets.
Existing
Products
Market
Penetration
New
Market
Markets Development
New Products
Product
Development
Diversification
BCG Matrix Analysis of Zanith:
The industry where Zanith are operating there business is a
matured industry. Intensive price competition will lead the
Zanith as the second highest competitor in the market. For
2007, sales were $42,633.4 (mill) which was 38% of total
market sales where their close competitor Wal Mart had only
29% of the total market sales. Zanith experienced sales growth
of 21.9% in 2007. Market leader is Wal Mart but in the year of
2007 Zanith sales revenue was 9% higher than the market
leader.
So, Zanith is now on Cash Cow stage. They have to invest
more to sustain in this stage.
Recommendations:
Actually top management of Zanith already take necessary decisions like opening more outlet in the different
courtiers to sustain in the market as leader but followings steps should taken by the Zanith for effectively
implement their strategic decisions:
1. Finding better source of inputs to reduce the cost of sourcing and should try to find out the new
international sources of raw material to gain international economies of scale.
2. Try to increase the total profit by increasing sales.
3. Develop separate R & D department or team to introduce new products & cervices, new process,
and to conduct market research.
4. Control the bad debt, credit card arrears and households insurance claims.
5. Find out better facilities location for store outlet.
6. Technological adoption for match the changes preferences of consumer.